Investment into Scottish commercial property reached a four year high in the first six months of 2022.
Colliers’ latest report showed that the first half figure reached £1.3bn, driven by an active office investment market and interest from cross-border capital.
The second quarter was particularly strong, with £700m transacted, well above the five-year quarterly average of £550m. In the second quarter, cross-border capital accounted for 61% of all activity by value; one of the largest shares on record.
The first half of the year saw several large ticket deals take place in Scotland, including the £215m sale of office property 177 Bothwell Street and the £124m funding and acquisition of Platform Bonnington; a 464 buy-to-rent unit scheme.
Oliver Kolodseike, director of research and economics at Colliers, commented: “It will be interesting to see how the market fares in the latter half of the year as current signs on the health of the economy are mixed.
“GDP has held up reasonably well so far this year, but economic forecasts are being downgraded and the PMI’s Future Activity Index fell to its lowest level in almost two years, adding to fears of a slowdown in the coming months.”
Office investment rose from £90m in the first quarter to £330m in the second. The figure is around 80% above the five year quarterly average of £180m and the strongest since the first quarter of 2018.
The second quarter was boosted by the sale of 177 Bothwell Street to Pontegadea Inmobiliaria - Scotland’s largest ever office transaction. Other notable deals include Assura Aspire’s £53m purchase of Edinburgh’s Gyle Square and Lime Property Fund’s acquisition of Kildean Business Park in Stirling for £22m.
Patrick Ford, director in the national capital markets team at Colliers, said: “This year it has been hard to predict which asset class is going to remain at the top of investors’ wish lists.
“Despite this, one thing is certain – there’s a real appetite for large scale capital deployment in Scotland, regardless of sector.”
The alternatives, mixed use and leisure sectors recorded investment levels of £250m in the second quarter, up from the £160m in the first. The levels are also around 40% above the five year quarterly average.
Boosted by the funding and acquisition of Platform Bonnington by Heimstaden Bostad - the second largest residential deal ever in Scotland - the alternatives, mixed use and leisure sector also witnessed the purchase of the Premier Inn in Glasgow for £30m by Ropemaker and the sale of Lossiemouth Bay & Burghead Beach Caravan Parks to Park Holidays for £9m.
The industrial sector had a quieter second quarter, with only £60m transacted across eight deals, down from £210m across 11 transactions in the first quarter. The largest transaction during the second quarter was Realty Income Corporation’s £33m purchase of a 48,900 sq ft industrial unit on Glasgow’s Newlands Road, currently let to Celeros Flow Technology.
Retail investment volumes slowed from £140m in the first quarter, to £60m in the second, with just seven transactions recorded.
Notable deals include Ediston Properties’ purchase of Glasgow’s 123-129 Buchanan Street for £16m - the largest retail deal of the quarter - and Realty Income Corporation’s £10m acquisition of Leven’s Riverside Retail Park.
A number of high-profile shopping centres are due to transact in the second half, including Hammerson’s circa £140m Union Square in Aberdeen and The Forge Shopping Centre in Glasgow.
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